13949 Ramona Aave.

 

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(a)	Unaudited Condensed Consolidated Balance Sheets as at August 31, 2015 and February 28, 2015.
(b)	Unaudited Condensed Consolidated Statements of Operations for the three and six months ended August 31, 2015 and 2014.
(c)	Unaudited Condensed Consolidated Statements of Cash Flows for the six months ended August 31, 2015 and 2014.
(d)	Notes to Unaudited Condensed Consolidated Financial Statements.

 

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		August 31,				February 28,
		2015				2015
Assets
Current assets
Cash and cash equivalents		$	42,504			$	145
Accounts receivable - net			4,293				29,987
Inventory			56,445				68,043
Advance to vendor			3,862				6,600
Prepaid expenses and other current assets			87,441				130,385
Total current assets			194,545				235,160
Property and equipment
Equipment			19,581				18,781
Computer equipment			13,904				13,904
			33,485				32,685
Less: accumulated depreciation			(31,483	)			(31,226	)
Property and equipment, net			2,002				1,459
Total assets		$	196,547			$	236,619
Liabilities and Stockholders' Deficit
Current liabilities
Accounts payable and accrued expenses		$	93,739			$	59,676
Loans payable			105,791				112,156
Notes payable			288,308				272,023
Derivative liability			221,985				-
Convertible notes payable, net			240,297				216,537
Related party payable			189,939				167,520
Total current liabilities			1,140,059				827,912
Stockholders' deficit
Common stock, $0.001 par value, 750,000,000 shares authorized;
52,000,000  shares issued and outstanding
as of August 31 and 54,000,000 February 28, 2015, respectively			52,000				54,000
Additional paid in capital			(179,873	)			(181,873	)
Accumulated deficit			(815,639	)			(463,420	)
Total stockholders' deficit			(943,512	)			(591,293	)
Total liabilities and stockholders' deficit		$	196,547			$	236,619

 

 

See accompanying notes to unaudited condensed consolidated financial statements

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KollagenX Corp

Condensed Consolidated Statements of Operations

(Unaudited)

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		For the six months ended
		August 31,
		2015				2014
Cash flows from operating activities:
Net loss		$	(352,219	)		$	(39,088	)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation			257				-
Derivative expense			105,739				-
Amortization of debt discount			23,760				-
Change in fair market value of derivative liability			(48,754	)			-
Amortization of consulting fees			42,944				-
Changes in operating assets and liabilities:
Decrease in inventory			11,598				(12,668	)
Decrease (increase) in accounts receivable			25,694				(11,497	)
Decrease in advances to vendors			2,738				-
Increase (decrease) in accounts payable and accrued liabilities			34,061				(1,120	)
Net cash used in operating activities			(154,180	)			(64,373	)
Cash flows from investing activities:
Property and equipment acquisitions			(800	)			-
Cash used in investing activities			(800	)			-
Cash flows from financing activities:
Proceeds from the sale of convertible notes payable			165,000				-
Proceeds from (repayment of) notes payable			16,285				(600	)
Proceeds from (repayment of) of loans payables			(6,365	)			2,907
Proceeds from related party payable			22,419				60,595
Net cash provided by financing activities			197,339				62,902
Net increase (decrease) in cash and cash equivalents			42,359				(1,471	)
Cash and cash equivalents, beginning of period			145				4,905
Cash and cash equivalents, end of period		$	42,504			$	3,434
Supplemental disclosure of cash flow information:
Interest paid		$	7,048			$	2,168
Income taxes paid		$	-			$	-

 

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KOLLAGENX CORP.

Notes to Unaudited Condensed Consolidated Financial Statements

As at August 31, 2015

NOTE 2 - BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

These statements reflect all adjustments, consisting of normal recurring adjustments, which, in the opinion of management, are necessary for fair presentation of the information contained therein. It is suggested that these condensed consolidated financial statements be read in conjunction with the financial statements and notes thereto included in the Company's annual report on Form 10-K for the year ended February 28, 2015. The Company follows the same accounting policies in preparation of interim reports. Results of operations for the interim periods are not indicative of annual results.  All inter-company transactions have been eliminated on consolidation.

For comparative purposes, prior year's condensed consolidated financial statements have been reclassified to conform to report classifications of the current year.

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As at August 31, 2015

 

 

 

 

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KOLLAGENX CORP.

Notes to Unaudited Condensed Consolidated Financial Statements

As at August 31, 2015

 

Level 1:

Valuations consist of unadjusted quoted prices in active markets for identical assets and liabilities and has the highest priority;

Level 2:

Valuations rely on quoted prices in markets that are not active or observable inputs over the full term of the asset or liability;

Level 3:

Valuations are based on prices or third party or internal valuation models that require inputs that are significant to the fair value measurement and are less observable and thus have the lowest priority.

 

 

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Earnings (Loss) per Share -

We utilize FASB ASC 260, "Earnings per Share." Basic earnings (loss) per share is computed by dividing earnings (loss) available to common stockholders by the weighted-average number of common shares outstanding. Diluted earnings (loss) per share is computed similar to basic earnings (loss) per share except that the denominator is increased to include additional common shares available upon exercise of stock options and warrants using the treasury stock method, except for periods of operating loss for which no common share equivalents are included because their effect would be anti-dilutive.

Income Taxes - Income taxes are accounted for under the asset and liability method. Deferred income tax assets and liabilities are established for temporary differences between the financial reporting basis and the tax basis of the Company's assets and liabilities at tax rates expected to be in effect when such assets or liabilities are realized or settled. Deferred income tax assets are reduced by valuation allowances when necessary.

Assessing whether deferred tax assets are realizable requires significant judgment. The Company considers all available positive and negative evidence, including historical operating performance and expectations of future operating performance. The ultimate realization of deferred tax assets is often dependent upon future taxable income and therefore can be uncertain. To the extent the Company believes it is more likely than not that all or some portion of the asset will not be realized, valuation allowances are established against the Company's deferred tax assets, which increase income tax expense in the period when such a determination is made.

Income taxes include the largest amount of tax benefit for an uncertain tax position that is more likely than not to be sustained upon audit based on the technical merits of the tax position. Settlements with tax authorities, the expiration of statutes of limitations for particular tax positions, or obtaining new information on particular tax positions may cause a change to the effective tax rate. The Company recognizes accrued interest and penalties related to unrecognized tax benefits in the provision for income taxes on the statements of operations.

 

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The accompanying financial statements have been prepared on a going concern basis which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As shown in the financial statements, during the six months ended August 31, 2015 and 2014, respectively, the Company incurred net losses of $352,219 and $39,088 as of August 31, 2015 and 2014 had an accumulated deficit of $815,639 at August 31, 2015.   If the Company is unable to generate profits and is unable to continue to obtain financing for its working capital requirements, it may have to curtail its business sharply or cease business altogether.  These factors raise substantial doubt about the Company's ability to continue as a going concern.

The financial statements do not include any adjustment relating to the recoverability and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

The Company is taking steps to provide the necessary capital to continue its operations. These steps include, but are not limited to: 1) focus on sales to minimize the need for capital; 2) converting part of the outstanding accounts payable to equity; 3) raising equity financing; 4) continuous focus on reductions in cost where possible.

 

 

NOTE 4 – PREPAID EXPENSES

On September 22, 2014 the Company entered into a twenty-four month consulting agreement, with a Company that has expertise in providing management advice and financial services advice.  The entire fee of $160,000 was paid in advance and is being amortized in equal monthly amounts over the twenty-four months.  $75,559 was amortized for the period September 22, 2014 through August 31, 2015. The consulting fee amortization for the six month periods ended August 31, 2015 and 2014 amounted to $40,002 and $0, respectively.

 

NOTE 5– LOANS PAYABLE

The Company had raised unsecured, non-interest bearing, due on demand loans from three individuals. The Company has been making payments to these individuals as and when demanded by the lenders. The loans payable consisted of the following as of August 31, 2015 and February 28, 2015:

  

		August 31,				February 28,
		2015				2015
Unsecured non interest bearing loan payable, due on demand		$	66,883			$	67,935
Unsecured non interest bearing loan payable, due on demand			13,908				19,221
Unsecured non interest bearing loan payable, due on demand			25,000				25,000
Total unsecured non interest bearing loans payable		$	105,791			$	112,156

 

KOLLAGENX CORP.

Notes to Unaudited Condensed Consolidated Financial Statements

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KOLLAGENX CORP.

Notes to Unaudited Condensed Consolidated Financial Statements

In September 2014, the Company entered into another non-negotiable convertible promissory note payable for a principal sum of $199,975 with interest thereon at the rate of 3% per annum. The whole principal sum and accrued, but unpaid, interest thereon is due eighteen months from the date of note in March 2016. The note is convertible, at the option of the Company, after six months from the date of note, as to both interest and principal, into common shares of the Company at a 10% discount to the closing bid price on the date of notice of conversion as reported on the OTC Electronic Bulletin Board, or any successor exchange. Since the note is convertible at the option of the Company and not at the option of the holder, no beneficial conversion feature has been recorded in the accompanying consolidated financial statements. The Company recorded an interest expense of $1,543 and $0 on the note for the three months ended August 31, 2015. The Company recorded an interest expense of $3,055 and $0 on the note for the six months ended August 31, 2015.

The Company entered into a convertible note agreement on July 20, 2015 for an original principal amount of $107,000. Pursuant to the agreement, the Company received $100,000 against the $107,000 note, after the original issue discount of $7,000. The Maturity Date of the note is one year from the date of advance. The Lender has the right, at any time after the issuance date, at its election, to convert all or part of the outstanding and unpaid original principal sum and accrued interest (and any other fees) into shares of fully paid and non-assessable shares of common stock of the Company as per the conversion formula. The conversion price shall be equal to 60% of the lowest trade price in the 20 trading days previous to the conversion. The note holder cannot beneficially own more than 4.99% of the number of common shares, immediately after giving effect to such conversion. The Company shall at all times reserve enough shares to effect the conversion of all the principal amount on the Note then outstanding. The initial number of shares of Common Stock reserved for conversions of the Notes shall be calculated as four times the number of shares necessary to convert the entire value of the Note on the day it was executed. The Company has reserved 3,005,000, which was the initial number of shares to be reserved. The note is unsecured and accrues interest at the rate of 8% Since, the note did not have a conventional conversion feature and had a variable conversion price indexed to the market price, the conversion feature was separately valued and was recorded as a derivative liability. The Company computed the initial derivative liability on the date of issuance to be $130,981. The Company recorded $17,000 as loan fee for the note which comprised of the initial issue discount of $7,000 and the broker fee of $10,000. Of the $130,981 of derivative liability, the Company recorded $90,000 as a discount on debt and the balance of $40,981 as initial derivative liability. They recalculated the derivative liability on the date of balance sheet as $114,238 and recorded the difference of $16,743 as a change in fair value of derivative liability on the income statement. The loan fee and debt discount is being amortized over the term of the note. For the three month period ended August 31, 2015 and 2014, the Company recorded an amortization of loan fee and debt discount of $12,279 and $0, respectively. For the three month period ended August 31, 2015 and 2014, the Company recorded an interest expense of $987 and $0, respectively.

The Company entered into a convertible note agreement on August 7, 2015 for an original principal amount of $84,500. The Maturity Date of the note is six months from the date of advance. The Lender has the right, at any time after the issuance date, at its election, to convert all or part of the outstanding and unpaid original principal sum and accrued interest (and any other fees) into shares of fully paid and non-assessable shares of common stock of the Company as per the conversion formula. The conversion price shall be equal to 47% of the lowest trade price in the 25 trading days previous to the conversion. The note holder cannot beneficially own more than 4.99% of the number of common shares, immediately after giving effect to such conversion. The Company will at all times reserve at least 3,200,000 shares of common stock for conversion. The note is unsecured and accrues interest at the rate of 12% Since, the note did not have a conventional conversion feature and had a variable conversion price indexed to the market price, the conversion feature was separately valued and was recorded as a derivative liability. The Company computed the initial derivative liability on the date of issuance to be $139,758. The Company recorded $9,500 as loan fee paid to the broker. Of the $139,758 of derivative liability, the Company recorded $75,000 as a discount on debt and the balance of $64,758 as initial derivative liability. They recalculated the derivative liability on the date of balance sheet as $107,747 and recorded the difference of $32,011 as a change in fair value of derivative liability on the income statement. The loan fee and debt discount is being amortized over the term of the note. For the three month period ended August 31, 2015 and 2014, the Company recorded an amortization of loan fee and debt discount of $11,481 and $0, respectively. For the three month period ended August 31, 2015 and 2014, the Company recorded an interest expense of $417 and $0, respectively.

Following is a summary of the convertible notes payable:

 

 

 

 

 

 

KollagenX Corp. (formerly known as Integrated Electric Systems Corp. and previously Raider Ventures, Inc.) was incorporated in the State of Nevada on March 5, 2007 as Northern Minerals, Inc.

 

Our original business was to engage in the acquisition, exploration and development of natural resource properties. We received the results of Phase 1 and Phase 1A of the exploration program from the consulting geologist. The findings were not promising and management determined it was in the best interests of the shareholders to allow the claim to lapse.

 

On July 17, 2014, our board of directors approved an agreement and plan of merger to merge with our wholly-owned subsidiary KollagenX Corp., a Nevada corporation, to effect a name change from Integrated Electric Systems Corp. to KollagenX Corp. KollagenX Corp. was formed solely for the change of name and business plan for the distribution of personal beauty products.

 

Articles of Merger to effect the merger and change of name were filed and became effective with the Nevada Secretary of State on July 23, 2014.

 

The name change has been reviewed by the Financial Industry Regulatory Authority (FINRA) and was approved for filing with an effective date of July 30, 2014.

 

The name change became effective with the Over-the-Counter Bulletin Board at the opening of trading on July 30, 2014 under the symbol "KGNX". Our new CUSIP number is 50043U107.

 

On August 4, 2014 KollagenX Corp. exchanged 10,000,000 of its Common Shares with the shareholders of KollagenX Inc. in return for 1,000 Common Shares, of KollagenX Inc., which were all the issued and outstanding common shares of KollagenX Inc., whose business plan is based on the distribution of personal beauty products.

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The acquisition of KollagenX, Inc. has been recorded as a reverse merger.  As such, the historical statements of KollagenX, Corp. have replaced those of KollagenX, Inc., except for the outstanding stock of the Company.  

 

KollagenX Corp.'s and KollagenX, Inc.'s respective year ends were March 31 and February 28.   KollagenX, Corp. has changed its fiscal year end to February 28. 

During the next twelve months we anticipate spending approximately $20,000 on professional fees, including fees payable in complying with reporting obligations, and general administrative costs.

Total current assets at August 31, 2015 were $194,545, a decrease of $40,615 compared to $235,160 at February 28, 2015.  Included in current assets were trade accounts receivable of $4,293 the proceeds of which were expected to be collected in the normal course of business, compared to $29,987 accounts receivable at February 28, 2015; inventory of $56,445 compared to $68,043 at February 28, 2015; advances to a vendor for product to be shipped of $3,862 compared to $6,600 at February 28, 2015; and prepaid expenses of $87,441 compared to $130,385 at February 28, 2015.  The decrease in prepaid expenses, of $25,943 is the amortization cost resulting from the prepayment of a two year consulting agreement.

 

Our cash in the bank at August 31, 2015 was $42,504 compared to $145 at February 28, 2015.  Outstanding accounts payable and accrued expenses were $93,739 plus other current liabilities, consisting of loans and notes payable totaling $584,038 compared to $59,676 and $551,699 in other current liabilities as of February 28, 2015.  These notes and loans are unsecured and bear no maturity dates.  No lender has demanded payment. The Company had two notes convertible at the option of the Company adding up to $216,537 outstanding as of August 31, 2015 and February 28, 2015.

During the quarter ended August 31, 2015, the Company signed two convertible notes totaling $191,500 and recorded a derivative liability of $245,745.

KollagenX Corp. had $42,504 cash on hand at August 31, 2015, which would be adequate, assuming the current level of sales, to sustain operations for approximately ten months. The Company is taking steps to provide the necessary capital to continue its operations. These steps include, but are not limited to: 1) focus on sales to minimize the need for capital; 2) converting part of the outstanding accounts payable to equity; 3) raising equity financing; 4) continuous focus on reductions in cost where possible.  Without that funding, the Company will not be able to maintain operations at the current level.

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There has been no change to the Risk Factors disclosed in our Form 10-K filed with the Securities and Exchange Commission for the year ended February 28, 2015.

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In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

 

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